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June 7, 2018Mobile Visual Search: A Picture is Worth a Thousand Searches
Focus Report, ReportsIn the past few years, search technologies have seen dramatic improvements with both voice and visual search emerging as alternatives to traditional text-based keyword search. While voice search may have gotten a head start, rapid improvements in AI and the quality of smartphone cameras means that Mobile Visual Search is fast catching up. -
June 6, 2018Football embraces Chinese ‘hot’ money – at a risk
Focus Report, ReportsIn a display of chutzpah, Mediapro acquired the Ligue 1 domestic broadcasting rights from 2020-24 in what is the most disruptive shock to the French broadcasting industry in a generation; one that is likely to accelerate Canal+’s decline, force a review of the outdated regulatory framework, and possibly spur an M&A spree. The Mediapro move only makes sense as a highly speculative bid to resell the rights, or a dedicated channel, to French platforms in 2020. The odds are high that the broker ultimately fails to fulfil the contract, as just happened in Italy, where Sky is now expected to get the Serie A licence. Precedents of new entrants acquiring domestic top-flight rights bode poorly for Mediapro, and for the league. The Ligue 1 may live to regret the introduction of a ‘re-sell right’ into its licensing terms. -
June 4, 2018News brands and reader subscriptions: Towards a sustainable futur [...]
Focus Report, ReportsPrint remains the primary revenue driver for most newspapers, but after 20 years of online news publishing we ask the critical question: how will publishers sustain newsrooms at scale when print has disappeared, or has contracted to a weekend luxury experience? The question needs to be answered in the context of both: 1) Rapidly declining advertising revenues in print media; and 2) A tiny and shrinking market share of digital advertising revenues. We believe these circumstances strongly imply the race for audience scale is more investor fallacy than a sustainable business prize; and besides, over-reliance on the advertising market for quality content provision is unappealing, particularly to proudly independent news publishers. Reader revenue, long assumed to be an impossibility for general quality digital news services, is the only answer. Registrations, membership and subscription models are being explored, tested, adopted or exploited by almost every major quality news provider in the US and Europe. The transition to subscription is hugely attractive, but requires first and foremost a new editorial strategy, requiring a wholesale business transformation. -
May 31, 2018French, Spanish and Italian telcos won’t bankroll further footb [...]
Focus Report, ReportsThe rights auction for France’s Ligue 1 will be held on 29 May. With Altice’s struggling subsidiary SFR unlikely to bid, Canal+ and BeIN Sports may not offer enough to meet reserve prices, triggering a postponement of the auction. In Spain, stiff fixed-line competition is shifting battlegrounds from football to scripted content. The Champions League has yet to sign up a platform for next season, while the upcoming 2019-22 La Liga rights auction may well fail to increase domestic revenues. With just 12 weeks before next season kicks off, Italy’s Serie A is also yet to secure a broadcaster, although we expect the league to back down and settle with Sky. In this deflationary environment, top clubs are eyeing a new Club Word Cup as an extra revenue stream – running the risk of further widening the financial chasm between themselves and smaller clubs. -
May 28, 2018Strategically challenged: Vodafone Q4 2017/18 results
Focus Report, Market Outlook, ReportsThe major change in trend evidenced in Vodafone’s Q4 results was a decline in mobile service revenue growth in Germany by 2ppts on the December quarter, in spite of record contract net adds and improving growth trends from its competitors. At least part of this deterioration is likely due to its strategic focus on converged products; we estimate discounts of around one third and question the rationale for this initiative, particularly given the admission that this is distracting from the core mobile business. Vodafone’s guidance for 1-5% group EBITDA growth next year reflects the challenging outlook and uncertainty in southern European markets, a more positive view on the UK, with Vodafone’s German strategy a major swing factor.Sector Telecom. -
May 25, 2018Retailing in the material world
Focus Report, ReportsEcommerce has grown to 17.5% of retail spend, and accounts for almost all growth in spend. Physical retailers are beginning to feel the effects, with chains reporting falling profits and even bringing in administrators. The UK picture is muddied by a general lack of economic recovery, and irrelevant comparisons with the US. Finished goods stores, however, are clearly under extreme pressure. We are moving into a retail paradigm of online and offline elements being freely matched. To survive this transition, brick and mortar retailers have to become differentiated experiences and close the data gap with e-retailers -
May 24, 2018European video-on-demand: Playing catch-up to the UK
Focus Report, ReportsThe UK continues to lead the EU5 in take-up and consumption of video-on-demand services, with close cultural alignment and a historic williness to pay for TV content making it a receptive home for US SVODs. Netflix dominates in most markets, benefiting from high-profile US imports and big-budget local productions. Local SVODs are struggling, with those operated by FTA broadcasters facing considerable challenges. Collaboration between local broadcasters and pay-TV platforms is essential if they are to hold at bay the threat of Netflix and co., with an increasingly favourable regulatory environment opening the door for unprecedented collaboration. -
May 21, 2018Virgin Media Q1 2018 results: Good, but beware headlines
Focus Report, Market Outlook, ReportsThe highlight of Virgin Media’s Q1 results was the return to growth for its UK cable ARPU (+1.3%), although the improvement in trend should be interpreted with caution due to accounting changes. Headline group revenue growth of 5.2% was boosted by profit-neutral handset sales, with underlying growth of around 3.2% – still strong in the sector context. Virgin Media continues to do relatively well in the increasingly challenging UK broadband market, but with evidence of limited pricing power, sluggish roll-out and subscriber growth, revenue trends look set to slow. -
May 18, 2018Vodafone/Liberty Global deal: Slim economics and regulatory risk
Focus Report, Market Outlook, ReportsVodafone’s acquisition of Liberty's assets in Germany and Central Europe is likely to face regulatory scrutiny at the EU – and possibly also German – level. We view Vodafone’s expectation of closure in mid-2019 with no remedies as unlikely. The economics of the deal for Vodafone are slim, highly reliant on extracting sizeable synergies, and vulnerable to operational risk and potential remedies for regulatory approval, particularly in Germany. While we see some synergy benefit from combining two cable assets in Germany, we are unconvinced of meaningful benefits from combined fixed/mobile offerings. -
May 17, 2018Wall St Shuffle: Spotify’s non-IPO
Focus Report, ReportsSpotify is now the world’s first publicly listed on-demand music streaming service. Its global footprint generated €4 billion in 2017 from over 70 million paying subscribers and 90 million ad-funded users across 65 countries. As it expands, the service is steadily but surely moving ever closer to profitability, with a 2019 operating profit a very real prospect. So far and for the near future, Spotify’s global pre-eminence versus competition from Apple, Amazon and Google proves remarkably resilient. Plans to build upon its differentiating features will become ever more decisive as the tech titans will continue to wield their resources and ecosystems against the comparatively undiversified company. -
May 15, 2018Covert growth in UK mobile
Focus Report, Market Outlook, ReportsThe UK mobile market is growing strongly – we estimate revenues by 5% and EBITDA by 8% in 2017 – excluding one-off regulatory drags and the loss of non-profit-generating handset revenue. Regulatory price cuts end in mid-2018, and the handset effect will disappear from all reported figures from April 2018, leaving scope for very positive headline growth next year – considerably better than its European comparators and the sluggish UK fixed market. The outlook for the UK mobile industry is the best it has been in a decade, with significant growth in data demand, price increases, some supply constraints, rational competition, and major regulatory drags rapidly fading. -
May 14, 2018
Video viewing forecasts to 2027: continued divergence by age grou [...]
Focus Report, ReportsOur latest forecasts predict traditional broadcasters will account for 72% of all video viewing in 2027, down from an estimated 82% in 2017, reflecting the continuing adoption of online video services across all UK age groups. Additional viewing of online short-form content such as YouTube will keep pushing overall volumes higher, with SVOD services serving more as a substitution for linear TV. The extent will be greater among younger age groups, for whom the shift has already been significant. We predict that in 10 years just 42% of 16-34s’ total viewing will be to conventional broadcasters versus 91% for the over-55s. -
May 13, 2018Bad health habits?
Focus Report, ReportsAustralia's overall health expenditure is growing faster than GPD - with no end is sight. Mega demographic trends such as ageing population suggest that our health costs as measured as a percentage of GDP will continue to grow for the foreseeable future. This places ongoing pressure on Governments and individuals to find the funding to support our health. The almost out of control tends with chronic avoidable diseases are a worrying concern. However, its not clear that lack of education is the only problem do we just have terrible health habits? If so, what can be done about its and who (governments, health insurers, health providers or individuals) should be responsible. -
May 10, 2018NBN update: more fibre + better pricing will lead to higher speed [...]
Focus Report, ReportsThe NBN has made significant progress on improving speed uptake on its network in the past six months driven by the pricing changes announced in November 2017. However, customer complaints that continue to rise as the rollout progresses and an increasing threat from fixed wireless substitutes continue to weigh on the future of the NBN. -
May 9, 2018European privacy: New Wave in the Old World
Focus Report, ReportsFor much of the online media industry, GDPR compliance has stalled at basic data audits and box ticking, as firms wait for the rest of the privacy regime to emerge. But weighing technicalities of legitimate interest and consent misses the point: transparent consumer value will be the only sustainable basis for processing personal data. The scrutiny of Google and Facebook privacy practices involves an added antitrust dimension, potentially leading to processing limits as remedies. -
May 8, 2018Trinity Mirror and Northern & Shell raise regulatory hackles
Focus Report, ReportsThe Competition and Markets Authority (CMA) halted the merger of the publishing assets of Trinity Mirror and Northern & Shell, and is inquiring into the merger’s likely impact on competition in the national newspaper market. The CMA will take into account efficiencies of £20 million in newsrooms, printing and advertising sales, which if realised could help sustain national news provision in a failing print market transitioning to digital services. Secretary of State (SoS) Matt Hancock has issued a Public Interest Intervention Notice (PIIN) citing newspaper public interest (PI) grounds, on concerns the TM/N&S merger may be contrary to the public interest -
May 7, 2018Blockchain: Reinventing the wheel
Focus Report, ReportsDespite the hype, systems based on the technology underlying bitcoin are a poor match for most use-cases. The term 'blockchain' is nowadays applied to technologies with shared aims and ideals rather than technological unity; few – if any – of these aims require true blockchain, any many are double-edged swords. The promises of blockchain are seductive in the context of programmatic online advertising, but are over-sold. -
May 3, 2018Grand new ideas for the content industry: Lessons from GDC 2018
Focus Report, ReportsLast month’s Game Developer’s Conference in San Francisco was a triumphant showcase for crossover technologies and ideas designed to attract and engage new customers; ideas coming soon to all parts of the digital entertainment industry. Google and Facebook launched new “Instant App” technologies for game developers on their platforms, which will eventually have a significant impact on mobile app curation and discovery for not just games but the broader entertainment sector. Universal Pictures showed how media and entertainment companies should be working with indie developers to drive franchise development, utilise creative IP, and bring new ideas to market quicker. -
May 2, 2018Small Cells Part 1: Leveraging Public Infrastructure
Focus Report, ReportsRecent public infrastructure deals have demonstrated the joint benefits of combining smart city rollouts with mobile networks. Venture expects more infrastructure deals to be completed as governments recognise the clear public policy benefits and Telcos roll out 5G networks faster. -
May 1, 2018Sky Q3 2017/18 results: ever more attractive
Focus Report, ReportsSky posted yet another set of solid results, with revenues up 5% and operating profits up 10%, despite weakening operating metrics in Germany & Austria. Deals with Netflix and Spotify will enhance the customer experience, signalling Sky's confidence in its platform, perhaps a sign of further deals to come. A successful outcome from February’s Premier League auction sealed the prospect of a takeover battle for Sky, with Comcast launching its formal bid this week. -
April 27, 2018Brexit Update: Domestic Issues
Focus Report, ReportsDespite apparent instability of the political climate in Westminster, the direction of travel is predictable as both main parties share the aim of Brexit. The big fight in Parliament is over the future trade policy of the UK. Officially, the UK wants to agree a Free Trade Area (FTA) with the EU, while the Labour Party and Tory rebels hope a Customs Union (CU) prevails, binding the UK to the EU’s trade policy. The Supreme Court is about to hear the UK Government’s challenge to legislation passed by the devolved nations of Scotland and Wales, which claim their consent is required for policies on agriculture, fisheries and the environment. -
April 26, 2018The Influence of Bots on Fake News
Focus Report, ReportsFake accounts could represent up to 15% of a digital platform’s total accounts and generate a high proportion of activity. Whilst, digital platform providers are taking some steps to prevent fake bot accounts, it is likely that Governments will set regulation to ensure providers formalise monitoring, blocking and labelling processes. -
April 19, 2018Fox offers sale of Sky News to clear merger
Focus Report, ReportsThe Competition and Markets Authority (CMA) will report on the public interest (PI) aspects of the Fox/Sky merger on 1 May to Secretary of State (SoS) Matt Hancock, who will announce his decision on 13 June to the Commons. Fox has offered to sell Sky News to Disney, which will prevent the Murdoch family from ever exercising control or influence and might appease opponents of the merger. The CMA is likely to advise the SoS to clear the merger, conditional on the Sky News sale to Disney, which the SoS could accept. Fox will then participate in the end-game for Sky, where Comcast is also a determined bidder. -
April 18, 2018
Sky’s Italian strategic breakthrough
Focus Report, ReportsAfter losing money for 13 years fighting Sky, Mediaset has given up. The two have agreed to wholesale channels to each other, and Sky gained the option to take over the infrastructure of terrestrial pay platform Mediaset Premium, in a deal designed to pass antitrust muster. The main strategic upside for Sky resides in eventual access to content from Italian FTA channels, allowing it to become the country’s ‘universal’ platform. Meanwhile, Mediaset may find it easier to resolve its dispute with France’s Vivendi now that the broadcaster has got rid of its main cash drain. Sky remains the only major potential buyer of the 2018-21 Serie A rights, to be sold on 21 April. However, due to the league’s unrealistic expectations and the faulty platform-based auction design, the auction may be aborted for a third time, raising the risk that heavily indebted clubs resort to short-term fixes.
